Tune up your finances

Ruth Nemzoff has worn many different hats during her lifetime, but one common thread runs through all of them — the desire to help others improve their quality of life.

As a former New Hampshire state legislator, she sponsored bills to reform adoption laws and to offer prorated benefits to part-time workers.

Later, as the state’s first female deputy commissioner of health and welfare, she supported legislative initiatives to modify discriminatory insurance and tax laws.

Today, the mother of four children devotes much of her time to writing and teaching college students about relationships between parents and adult children.

Nemzoff, who holds a doctorate degree in social policy, says traditional models of parent-adult child relationships are out of date because cultural norms have changed dramatically, and life spans have increased to the point where one could expect to interact with two, three and sometimes four generations.

For example, many adult children today either don’t leave home or return after a brief stint in college, whereas just a few decades ago, there was a certain stigma associated with single adults living at home with their parents.

Young adults were expected to either start families or get a job if they didn’t go on to college. Today, those old notions have been turned upside down as America evolves culturally and economically, Nemzoff says.

Bankrate caught up with Nemzoff recently as she was touring another dynamically changing society: China.

What has changed in the past several decades that makes it more acceptable for adult children to live at home with their parents?

The economy has changed. That’s one of the biggest things. The other thing I would say is we are a much more multicultural society. In many cultures there is no stigma. In fact, it is the expectation that kids will live at home. The economy has clearly made it more difficult to afford rent, and the cost of education is higher. Kids are coming out (of college) with a lot of debt, and one way to deal with the debt is to get free housing. Many of our kids are much more sophisticated and have traveled abroad, too.

Some kids are used to a better lifestyle, which they can’t give to themselves, so they might be doing it because they don’t want to deal with the inconvenience of a one-room apartment with the three-floor walk-up.

College students are racking up record amounts of credit card debt by the time they graduate, according to recent studies. What is contributing to this trend, and how can it be reversed?

Tear up the credit cards because that is the most expensive way to borrow money. Using credit cards to borrow money is bad training for the future. However, education has become so expensive that students may need to work a year at odd jobs, then study for a year. Alternatively, they could go at night and live at home to save money for education or go to community college. The old models may not work in this new economy. Many immigrants in the past worked full time while they obtained an education. Maybe this old model will come back.

How important is it to teach children and teens about finances early on?

It’s very important. One technique is to give kids a checking account with very little money and have them manage it while they are still in high school. They will learn quickly about penalties for going over the amount designated.

Tune up your finances

Do you think boomerang children should be required to share basic household expenses? After all, wouldn’t it be detrimental if the child believed he or she was getting a free ride?

In certain families, that’s absolutely true. Again, it depends on the circumstances. If the parents are wealthy and have lots of disposable income, they might prefer services rather than money. Services are as valuable. For example, if you pay a gardener $4,000 a year, show them the bill. You can tell them that if they live at home, “I’m going to hire you instead of Joe the gardener.” That’s something you can actually quantify. In some families, parents accept rent but put it in a special bank account. They’re actually doing forced savings and not telling the child. It’s very dependent on the child and parental attitude, but yes, there has to be some responsibility.

Should adult children who live at home start saving for long-term goals like retirement?

Certainly, young people need to start thinking about retirement at a young age. There’s a whole financial literacy piece that we need to teach our kids because part of financial literacy to me is thinking about the long term in your life. In addition, because of the economy, the parents may need to collect rent because they need it for their retirement. But, I do believe we need to talk with our kids about retirement. They need to know what the options are and understand the trade-offs.

Should parents establish a time frame for how long boomerang kids can live at home?

It depends on the situation. In this economy, it may be difficult to find jobs, so instead of setting dates for leaving, set expectations. For example, tell them as long as they are actively looking for a job, or as long as they are going to school or saving for a down payment, they can stay. These expectations are a negotiation that starts with the question: What do you think an appropriate time frame might be to stay with us? And what do you think would be fair for us to expect? Then negotiate from there.

What is the best way to handle money requests from adult children, and when is it OK to say no?

In many families, if the child is doing everything that is responsible and still is not finding a job or getting into school but is volunteering in order to build his/her resume, you may want to say yes to requests. While each family has its own views of what constitutes a good faith effort and what is appropriate preparation for adulthood, it’s important to listen to the views of other families — and to those of our children — in order to understand the many perspectives of how one crafts a life.

If the child has a salary, certainly they should pay all their own expenses. Part of being an adult is making value judgments about money. Adults differ on what they value, but parents can suggest and share their experiences (and their regrets) as well as their wise decisions. Parents might even learn something from their children’s perspectives.

How difficult was it to juggle family responsibilities while you were working as a college professor and state legislator?

It was always difficult to juggle family and work. I was fortunate that my husband earned a good living. Even so, combining work and family is very stressful, and that is why whatever support the generations can give to each other is so important. We need each other for birth, for death and for all the crises in between. Having relationships with parents in which they are willing to help out in stressful times is important. Parents are more likely to help if they feel loved and appreciated and are given some leeway to follow their instincts.

Under what conditions is it better for aging parents to live with adult children rather than be placed in a special care facility?

Again, it depends on the family. In many foreign cultures and some American cultures, the expectation is that parents will live with adult children. Finances and community resources all play into this decision, as do personalities of the generations. There really are no rules.

Why do you think Americans are so cool to the idea of intergenerational households?

One thing that makes an intergenerational household work is when the rules are clear. In most societies where there is an intergenerational household, the kids follow the parents’ rules. We’re a society that is much more into independence and generally don’t want to give that up to follow someone else’s rules.

If you are looking for perfection and a smooth ride, do not live together. If you are looking for love and emotional richness, you might find it in an intergenerational family.

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